“Nothing in life is certain,” Ben Franklin famously wrote in a letter to Jean-Baptiste Leroy in 1789, “except death and taxes.” Well over 200 years later, we deal with both, and greet them with equal dread.
Four years ago we were able — through the tremendous activism of small, family-owned manufacturing companies and their employees — to begin phasing out the death tax, the tax owed upon your death by your estate. Unfortunately…
…because of arcane Senate rules, the tax is only fully repealed for one year and — absent any legislation — the tax will reappear in its full glory in 2011. As a result, you need to have the wisdom and good fortune to die before the decade is up, else you’re back in hock to the IRS. What an asinine rule — an estate tax repeal that sunsets. Why is this a manufacturing issue? It’s easy to understand when your estate includes your manufacturing company.
In any event, the Washington Post got it fabulously wrong (guess it was about time after a few editorials where they got it right) last Saturday with an editorial entitled, “Estate Tax Sham“. It opens with a typical Post sneer: “Exactly how much should the super-rich be able to pass on to their kids tax free? All of it — or will a mere $8 million suffice?”
In two sentences, the Post manages to show its colossal ignorance of the death tax and disregard for manufacturing. There is no doubt that we’d all love to have $8 million. If we did, we’d surely be as rich as Post Chairman Don Graham. And there’d be no justice in skipping off tax free, right? OK, here’s the rub: an $8 million manufacturer would be a pretty darn small manufacturer. In fact, a $25 million manufacturer is considered a fairly small business, as we are such a capital-intensive industry.
When the owner of a family-run manufacturing plant dies, and the company will continue to stay in the family, continue to run, why on earth (no pun intended) should death be a taxable event? To satisfy the enormous taxes, the manufacturer’s heirs either need to sell (or liquidate) the company or borrow money to satisfy the tax man, thereby loading crushing debt on a small company. In many cases, the company fails (if it’s not liquidated), taking with it the jobs of all the employees.
So let the Post rant about the rich while sipping their chardonnay, but please leave us manufacturers alone. Let’s not make death a taxable event, let’s make sure our companies can pass quietly — and freely — to the next generation, and the next, ensuring that manufacturing in America will remain vibrant and strong as ever.
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